Treasury bails out KQ with Sh5 billion loan for renovation

Treasury bails out KQ with Sh5 billion loan for renovation

February 28, 2020 0 By mykenyancareers
KQ EMBRAER E190 - Treasury bails out KQ with Sh5 billion loan for renovation
Joseph says they received a Sh5 million grant to renovate engineering operations and general administration/FILE

NAIROBI, Kenya, Feb 28-The National government has injected Sh5 billion to Kenya Airways to be used to renovate part of the airline structures.

In a letter addressed to Nairobi Securities Exchange boss Geoffrey Odundo, KQ chair Michael Joseph says they received a Sh5 million grant to renovate engineering operations and general administration.

“KQ through the national treasury made a loan on commercial terms of Sh5 billion for the purpose of enabling KQ to complete the scheduling engine overhaul program on its E190 Embraer fleet and fund its general working capital requirements,” reads the statement.

Joseph further urged investors to trade carefully when
dealing with the airline securities since the company may restructure and in turn
affect bills.

“The possible restructuring may once be confirmed in greater detail have a material effect of the price of KQ securities, therefore, shareholders are advised to exercise caution when dealing in KQ’s securities until a further announcement is made,” Michael Joseph adds.

Last month, the government wrote off an Sh24.2 billion loan to assist the loss-making airline bounce back to profitability.

The Treasury had then revealed that
the loan was part of Sh27.2 billion worth of dormant loans that the Cabinet authorized
to be written off.

However, tables turn around last
month after the Cabinet
Secretary for National Treasury, Ukur Yatani, announced that the treasury
department was mobilizing resources to restore the company.

The
airline recently appointed Allan Kilavuka as the CEO following Sebastian
Mikosz’s resignation.

In
2019, KQ’s half-year results fell to Sh8.56 billion attributing its losses to
increased operating costs in the wake of expanding to new routes and the return
of two Boeing 787 planes that had been subleased to Oman Air.